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9 out of 10 New Recruitment Agencies in Singapore will Close Down

If you are involved in Recruitment Agencies in Singapore for the last 10-20 years, you will notice that the number of cases and sales value a recruitment consultant can close compared to many years ago is declining every year averagely.

10-20 years ago, a normal recruitment consultant in any recruitment agencies in Singapore will be able to close an average sales value of S$20,000 – S$30,000 per month but in the year of 2012, a normal recruitment consultant that is able to close a value of S$5,000 – $10,000 per month is consider to be quite good.

If this trend continuous to decline, I can foresee that the whole industry can dis-integrated and falls apart. Many will failed, including the bigger players. There are many valid reasons why I have the guts to make this projection:

The Recruitment Agencies in Singapore Mindset

The Diminishing Factor 

Most of the newer recruitment agencies bosses come from the background of being a consultant before in one or more of the agencies, the knowledge and skills they have learned from their “mentor” are always limited because the mentor never wants to teach them many things, don’t even talk about skill sets.

Hence when the knowledge of the new recruitment agencies bosses is so limited, the new consultants under their wings under this new bosses will be even lesser because they are not able to learn much from their current bosses.

To make matter worst, these new consultants will think they are so great that they gather together and form another recruitment agencies and hope to make huge income from becoming their own bosses. This cycle goes on and on and eventually, the skill set of the consultants gets weaker and weaker.

The Secret Trap

Many recruitment agencies bosses never share their clients and database with their consultants because they are afraid that the consultants will steal their clients and database to use it when the consultants form a new company.

Assuming that the boss has 50 job orders and they are not open enough to share to their consultants, they will not be able to fulfil these 50 job orders entirely because of lack of time and resources.

They are very happy they are able to close 5 case and lose the other 45, that means the other job orders will be lost to other agencies

How’s that for been “Smart”?

Get the picture?

If he is open enough to throw the other 45 orders to the rest of the consultants, the company will be able to close more cases many time compared to just 5 job orders. (Assuming that the job orders are real and valid.)

The Competitions Factors

10-15 years ago, there were about 500 recruitment agencies in Singapore but in the year 2019 April there are coming to over 3,807 recruitment agencies in Singapore, hence the clients have more choices and better pricing, the smaller agencies will have problem even to break even at all, if times are bad, then the agencies will make a loss and eventually have to close shop.

Inadequacy of Skills

A recruitment consultant has to be a great salesperson, a great presenter, a great interviewer, a great searcher, a great advertiser, and a great negotiator, do you really believe a 2-3 days crash course can make a consultant to be able to become the superman?

The hard fact is that it is almost impossible to find someone of such skills because most of them are not trained to be at that level! The entire industry is filled with people that DO NOT have the right skills, no adequate training, no investment done on training and no coaching and mentoring….

Apparently, they are also very much into having a single recruiter doing the entire 360 recruitment process that is totally not recommeded. 

Could this be the doom and the end of the Singapore recruitment industry?

The CEI Problem

What is a CEI? 

Accordingly to MOM website:

The Certificate of Employment Intermediaries (CEI) aims to equip employment agency (EA) personnel with knowledge of employment laws and regulations.

This ensures that EA personnel understand their obligations under the law and are able to advise their clients of their rights and responsibilities.


Many smaller agencies will not have the resources and money to pay for the new recruitment consultant and even if they are willing to there is a risk that the consultant may leave the agencies due to some KPI issues or having a better offer.

Hence the small players are very cautious and unwilling to pay for the total fees that are amounted to about S$600.00 per consultant. 

Bigger players with good brand and financial resources will be able to play this “BULLY” game as they are not afraid of losing the S$600.00 because the consultant usually got more to lose than the bigger agencies.

I am The Boss Mindset

Talk to any consultant out there and ask them the question: Would you want to have your own agency when you have the opportunity and the financial resource?

I bet 8 out of 10 of them will say YES!

Why is that so?

Simply because they want to make more money and want to be their own boss, many of them will go for the opportunity even if they were to partner with a few others, simply because they LOVE to be their own boss and apparently they will believe that they are going to be a better boss compared to the current one! (Oops did i rang any bell?)

With this mindset, recruitment agencies are usually not able to retain good staff simply because the good ones decided to have their own firm.

When there are no good staff, there will be lesser sales and eventually, you will know what happen…

The time will come where the entire recruitment agencies system will face a crisis and there will be a total revamp and market will change and the first one to set the trend will be able to dominate the industry entirely.

The time will come and when it happens, many players regardless of whether small or big will face total elimination! 

Mark my words…it is already happening.

With the onslaught of many new recruitment agencies setting up everywhere and the market opening itself to more dimensions, the loyalty of the recruitment consultants staying in a company for many years is a distant memory.

You see, the business of recruitment agencies can be easily duplicated, and apparently, although in Singapore, it would require the company to get a MOM EA license to started a new recruitment agency in Singapore, it will still not obstruct people who are desiring to be rich. Even with the need to pass the examination of KAH will also not be a hurdle for people who desires to be rich.

When you are one of the top recruitment consultants in a company that had achieved the top sales for months, greed and EGO take over.
It is time to make money for myself!

Why would I want to work so hard and earn for my current boss of the recruitment agency. 

Many people who work in a recruitment agencies in Singapore handle the clients and candidates directly, and when they make over $10,000 – $20,000 per month in sales, they have a tendency to believe that they can earn more IF they were to start on their own.
This is partly truth, but my friend, this is only the surface of the “honey”, you have not really see the problem real yet…..

So even if you do not have enough capital and when you talked to some potential investors, and eventually, one of them who is not in the recruitment industry will be willing to pump in the money and support you to start the recruitment business, they believe it is so easy…. It is not!
Of course, that recruitment consultant will automatically become the Managing Director of the new company.

Wow, how sweet!

Sales will Drop!

When the new recruitment agency is set up, the Managing Director, which will be you, will stop doing sales, okay, not 100% dropped in all your sales but you will be putting less efforts in closing sales and when there are new job orders, they will be pushed to the new consultants.

You will be overwhelmed with other things like accounting, human resources, daily operating problems, etc, etc….

Being trained by the previous manager who kept everything to himself, the skills of YOU will also be limited, and most likely, you may not really had the experience of running a business before. Oops….. nah, how bad can it be? It is bad….

You only know how to talk to clients and candidates! Sales…..
In actual business, it is more than clients and candidates; real business involves the following:

Sourcing for the best place to work (the office).

I have seen people paying over 6 times the amount just to get the office that he desires, resulting in the problem of cash-flow. 

Most people were slaughtered by this because they have no idea what is the best deal in the market.

Nine out of ten of them will be misled by the commercial rental agents, as they are not IN the market.

Creating a brand that has a deep impact.

Many people think this is redundant because they are not into marketing and branding, and of course they do not know it is EXTREMELY important.

The fact is that the brand says a lot about you, and if you cannot create the difference, you will be like any of them out there.

Here is what I really meant about branding, do you DIY your recruitment agency website? Do you take your own photo that puts in your website or your social media profile rather than getting a professional photographer? Do you create your own video that to get a professional videographer to help to take a corporate video for your website. 

How much you have SAVED in terms of cost will tells how much is your brand, if you know what I really meant.

Recruiting the right staff.

Most of them who are recruitment consultants failed in their selection of the candidates because many of them are not even trained how to do so.
Yes, hear me right, they do not know how to choose the right candidates, many of the just trial and error and basing on number game, there should be some cases will be closed.

But this is totally not effective and waste plenty of resources. 

They just go through many hundreds and thousands of resumes, and they believe they are good interviewers and they will be very successful in the recruitment business.

Here is the critical question – if YOU do not know how to recuit the right person, how are you able to recruit the right recruitment consultant for your company. Recruiting recruitment consultants in Singapore is far more scheming and tougher than any job order out there, mind you, there are many sharks out there…. when I mean the sharks, the recruitment consultants are the sharks! You will be eaten up alive, without even knowing why….

Leadership and retention 

This will kill many. Seriously speaking, these things usually do not exist in the new Managing Director because they are not trained how to do s However, many still believe they are good in these areas!

Understanding the industry

Most new recruitment agencies do not even know anything about the Market Tumours, and when I explained hem to the MT, most just stared blankly at me and were at a loss for words because I had decoded the entire recruitment agency industry and torn it apart to bits and pieces to a point they had not seen before.

Managing the cost of operating 

Most of the new Managing Directors do not have these skills because they are not trained at all.

Generating sales 

Based on the 80/20 rule, eight of your consultants will not be producing and only two will produce.

With that, the salary will be more than the sales, and any logical investor will pull the plug eventually.

Wait.. I lied! It is not 8/10 will not produce, 10/10 will not produce any exciting results.

The Managing Director will need to incorporate new ways to generate new consultants, new clients, and new candidates because they will find that the previous method they used will not yield good returns.

Training

Your recruitment consultants needs training in almost all areas. Most of them do not believe they need to train staff.

Well, if the skill set of the company staff is not up to standard, eventually the sales and clients will go elsewhere!

Anyhow, managing a new recruitment agency in Singapore is not as easy as it seems.It takes more than hard work and sales to make it happen.

You will need to focus, innovate, position, brand, change, and adapt to be able to make it big.

Good luck! You will need it.
 

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